Judge blocks cost-of-living cuts to pensions

HELENA (AP) — A Montana judge on Friday blocked reductions to the annual cost-of-living raises on pension payments that thousands of retired local and state government employees receive.

District Judge James Reynolds in Helena granted a preliminary injunction to the Association of Montana Retired Public Employees and individual retirees, Lee Newspapers of Montana reported.

Lawmakers earlier this year passed a pension overhaul measure cutting retired public employees' annual inflationary increases from 3 percent to 1.5 percent. An additional trigger lowers that to 1 percent on Jan. 1.

Assistant Attorney General Mike Black says the Legislature has the right to reduce cost-of-living increases when necessary. A call from The Associated Press to Black's phone number at the attorney general's office went unanswered Saturday.

The retirees say the move is an unconstitutional reduction of their benefits.

Reynolds in his ruling said his job was to decide if the petitioners had shown a violation of a constitutional right had taken place, and if so to preserve the status quo until a trial could be held.

Specifically, lawmakers reduced the Guaranteed Annual Benefit Adjustment, or GABA. Reynolds noted that lawmakers had previously reduced the GABA, but for newly hired employees, not existing or retired employees with established contracts.

"To be clear, the court is not concluding that the state cannot reduce the GABA," Reynolds said. "The state did just this with its 2007 amendment reducing the GABA to 1.5 percent for newly hired employees. The state did in that enactment what it has not done in this enactment — made the reduction applicable only to newly hired employees, without changing the GABA for existing retirees."

The judge said new workers knew the terms of their contracts, but existing retirees' contracts were changed under this year's overhaul.

On another front in the same battle, the Montana teachers union and six retired and current employees have challenged the cost-saving cuts to their pension payments as unconstitutional. They have also requested a preliminary injunction.

District Judge Mike Menahan, also based in Helena, has yet to rule on that request.